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The Price of Greed

September 21, 2008

Piglipstick_2Try $2 trillion (that's trillion with a "t"), courtesy of you, the American taxpayer:

  • Bear Stearns bailout: $29 billion
  • Economic stimulus program: $200 million
  • Fannie Mae and Freddie Mac rescue: $200 million (conservative estimate)
  • Bridge loan to American International Group (AIG): $85 billion
  • TAFs and liquidity injections over the last twelve months: $600 billion
  • Guarantee principal in money market mutual funds: $50 billion
  • RTC-like entity to purchase Wall Street's toxic mortgage-backed securities: $700 million (and I have a bridge in Brooklyn I'd like to sell you)

And we're not even halfway through the crisis. What else (beside bailing out Wall Street fat cats) could we do with $2 trillion?

  • Rebuild our public education system so that our kids and grandkids -- all of them -- have a chance to compete in a 21st century economy
  • Subsidize health care for the 45 million Americans who go to bed every night without coverage
  • Create a Manhattan-type alternative energy project to break our $700 million-a-year dependence on foreign oil
  • Rebuild our crumbling infrastructure

Philanthropy can't do those things by itself. Faith-based groups can't do those things. Keep that in mind when you go to the polls in November. Oh, and the next time someone tells you "Government isn't the solution, it's the problem," ask him when you can expect your bailout check.

-- Mitch Nauffts

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Posted by DJ  |   September 22, 2008 at 05:39 PM

Sadly, we're at the point where if we don't "bail out the fat cats", the result would be to put our money's worth somewhere between dustbowl-era America and Weimar-era Germany, if some of the more dire reporting is to be believed.

Of course, in this case, government IS the problem, and is the main instigator of this mess. The government- years ago- mandated that sub-prime loans be made available to poor credit risks under the aim of promoting affordable housing.

The results of lending to credit risks seem pretty obvious now, though very few of us were raising the alarm at the time.

Posted by Amit Shah  |   September 23, 2008 at 08:57 PM

The "government" ---yes, but also a Republican party that controlled the government and drove home the "hands-off, Daddy-[Wall Street]-knows-best" policies from the high-flying Reagan years when de-regulation and "government is the problem" was the mad mantra. Unfettered greed with no regularatory watch dogs on risky investments and Nero-esque executive pay bonuses has brought us to this stage. Let's clarify what "government" means in a two-party ssytem.

Posted by DJ  |   September 24, 2008 at 09:54 AM

Oh Amit, Amit, Amit.....

Do you really want to get into that here? About how Obama was among the top recipients of lobby money from Fannie and Freddie? (And how his financial advisors Raines and Johnson were part of that problem) Or about how Chris Dodd just happened to get a sweetheart mortgage deal from a lender when he was Committee Chair. overseeing legislation that would just happen to impact that lender? And do you really, REALLY want to get into how the whole subprime loan mess was pushed on us by Clinton, Barney Frank, and others under the aim of pushing "affordable housing"?

Here's a fun quote from 2003, in response to Pres. Bush wanting to impose regulatory overhaul on Fannie and Freddie:

''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.''

Also, the Dems have had congress the past 2 years. Where's the regulatory oversight been?

*crickets chirping*

There's plenty of blame to go around on both parties, wall street stupidity, and the greed of people eager buy homes they couldn't afford, to but since you "wanted to clarify what government means in a two-party system".....

Posted by Amit Shah  |   September 24, 2008 at 12:20 PM

The clash of ideas is the sound of freedom; but the sound of political campaign ads masquerading as debate is as full of hot air as Republicans falling over each other to move away from the falling debris from Wall Street unregulated fiasco, the Federal government's record-breaking deficits and not the least of it --- a spending on a war that has no exit strategy that is comprehensible. The false debate about government reglations versus free markets must end; partisan politicking is illiterate. The role of government is to regulate institutions in a democracy for the good of all in that society; not just for a segment.

Posted by DJ  |   September 24, 2008 at 03:21 PM

"but the sound of political campaign ads masquerading as debate is as full of hot air"

I find that statement quite rich coming from someone who's 2 posts are almost exclusively partisian talking points, right down to bringing up Iraq out of nowhere. You're also the one who first felt he had to assign political responsibility to a particular party. So please don't turn around and tell me "partisian politicking is illiterate." Pot, kettle and all that. I will note that you mysteriously don't mention the high cost of energy among your litany of ills, and who is doing the obstruction there. But I do invite you to point out where I was incorrect, rather than to just dismiss what I said because of your political views.

Idealogical jousting aside, it certainly isn't a "false" debate about regulations vs free markets. I admit there must be some degree of regulation- but the debate is where to draw the line.

THIS particular problem didn't happen because Reagan and Bush and the GOP allowed the "Wall Street Fatcats" to run wild and do whatever they wanted. This problem happened because Government decided to use financial policy and institutions (in this case, Fannie and Freddie) to push a social agenda (in this case, promoting "affordable housing" through sub-prime mortgages)

Once you had Fannie and Freddy involved with bad debt- and lots of it- you had the makings of a disaster.

OVERregulation in action.

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